China: BF mills' production falls to 2-month low

• capacity utilisation falls for third straight week
  
  
• 50% of mills see negative margins on steel sales
  
  

Mysteel Global: Production among Chinese blast furnace (BF) steel producers continued falling this week with mills conducting more maintenance stoppages amid their persistently thinning profit margins, Mysteel's latest survey showed.

The average capacity utilisation rate of the 247 BF steelmakers under Mysteel's regular tracking dropped for the third straight week by another 0.47 percentage point on the week to touch a two-month low of 87.33% during 29 November to 5 December, with their daily hot metal production decreasing 12,600 tonnes/day or 0.54% w-o-w to 2.33 million t/d.

During the same period, the operational rates among these sampled 247 mills averaged 81.47%, lower by 0.15 percentage point from the prior week, the survey showed.

Moroever, some mills in East China have blown off their furnaces to conduct annual maintenance as the year-end approaches, Mysteel Global learned.

Meanwhile, domestic steelmakers' production enthusiasm also weakened further since a growing number of mills began to suffer losses on steel sales, Mysteel's other survey showed.

As of 5 December, around 50% of the 247 steel mills Mysteel monitors were bearing negative margins on steel sales, higher by 2 percentage points from a week earlier.

Although prices of finished steel products gained some ground during this week, steelmaking raw materials like iron ore also climbed up, so the profit margins remained narrow for Chinese steelmakers, Mysteel Global noted.

In tandem with the reduced hot metal production, the daily consumption of imported iron ore among the 247 steel mills under Mysteel's tracking dipped by 9,200 t/d or 0.3% w-o-w to 2.89 million t/d during 29 November 29 to 5 December.

Nevertheless, domestic steelmakers have maintained their steady purchases of iron ore since they need to build up ore stocks to ensure that they have sufficient feed materials for normal operations in deep winter, Mysteel Global learned.

As a result, the total inventories of imported iron ore in all forms held by the same 247 mills increased by 866,100 tonnes or 0.9% w-o-w to reach 93.7 million tonnes as of 5 December, which would be sufficient to last them for 32.5 days at their current usage rate, longer by 0.4 day from the previous period, Mysteel assessed.

Note: This article has been written in accordance with a content exchnage agreement between Mysteel Global and BigMint.